Cape Air weathers shifting travel patterns

Pru Sowers

Friday

May 29, 2009 at 12:01 AMMay 29, 2009 at 4:21 AM

It’s an interesting time to be Dan Wolf. As president of Cape Air, the independent regional airline that got its start in 1990 flying just one route from Boston to Provincetown, he is facing a dicey summer vacation season that on paper right now doesn’t look very good.

It’s an interesting time to be Dan Wolf.

As president of Cape Air, the independent regional airline that got its start in 1990 flying just one route from Boston to Provincetown, he is facing a dicey summer vacation season that on paper right now doesn’t look very good. But he is also overseeing the largest route expansion in the company’s history, moving into 14 new cities in the past year alone. And in his spare time, he is trying to figure out how the company will replace its signature nine-passenger plane that Cessna has stopped manufacturing.

All in a day’s work, he says, projecting infectious optimism about Cape Air’s future. He is currently performing a balancing act to determine what level of service reductions should be implemented in the Provincetown market, which has seen a 30-percent drop in advance bookings for June, July and August, considerably above the 10-20 percent decline in bookings for the airline company-wide. Part of that decline has been caused by the drop in European vacationers expected this summer, scared off by the global recession and the increase in the value of the dollar against the Euro.

“[The European market] was huge last year for Cape Air because they all flew into Boston. Even if Provincetown does well this year, if it’s a drive market, that won’t help us,” Wolf said, referring to projections that Cape Cod may actually fare well this summer as people decide to take their vacations closer to home, driving instead of flying.

Still, he is optimistic that the fall in advance bookings for travel to Provincetown may not come to pass. The industry has come up with a new term, “booking curve,” which means that people may be waiting until the last minute to book their vacations. Tourists who normally make reservations three months in advance are now booking three weeks ahead, Wolf said. While Provincetown passengers in May dropped 10 percent compared to last year, the number of Memorial Day weekend passengers was even with 2008, an indication that the booking curve is a reality.

As a result of the projected drop in passengers for the Provincetown-Boston route, however, Cape Air has implemented a 20-30 percent reduction in non-peak flights June and September and will not be implementing its busier summer flight schedule until the end of June. But the frequency of flights during the peak Friday and Sunday travel times will remain the same.

”We’re trying to eliminate flights no one was on. This year we are going to reduce the frequency [of flights] during the mid-week in the early season,” Wolf said.

Instead of planes sitting idle because of the flight cutbacks, Wolf is turning a potential negative into a positive through the company’s ambitious route expansion. He is moving unused capacity in the form of airplanes into busier routes, where the small size of the airline gives it the flexibility to implement nimble changes. Provincetown’s loss is New Hampshire or Baltimore or White Plains’ gain, because the planes can be moved to where the demand is. Wolf didn’t specifically plan on the route expansion helping the airline weather the economic downtown, but it has.

“You could say that is smart planning. I could say it’s lucky. This is the best possible way to deal with a recession,” he said.

As a result, there have been no layoffs at Cape Air and the airline is coming off one of its best years ever in 2008. The falling price of fuel has helped, but the company’s second highest cost is personnel. It maintains a staff of approximately 700, including 250 on Cape Cod, where Cape Air operates its headquarters, reservations system and airplane maintenance services.

It’s the maintenance operation that has become an even more critical element in the airline’s success, Wolf said. Cessna has stopped making the 402, which is the only airplane Cape Air uses. As a result, the company is spending millions buying up used 402s to use for parts to maintain its fleet of 58 planes. Wolf said he expects Cape Air has 10 to 15 years left in the 402 fleet.

He has been talking to potential manufactures about developing an airplane to replace the 402. Wolf has decided that a nine-passenger aircraft is the right fit for Cape Air. However, he is talking about making some upgrades.

“We think the airplane size is right. It could change the character of [Provincetown] if we had bigger planes going to bigger destinations,” Wolf said. “The nine passenger is right but we’d like the capacity to carry more bags and maybe go a little faster. It takes a long time to ramp up an airline production line. We’re looking at three to five years to start phasing [a new airplane] in.”

In the meantime, Wolf and his staff are on the lookout for new routes that will help the airline grow, perhaps a route to Cuba if U.S. travel restrictions are eased, using Cape Air’s existing Key West facility. Expansion into the Dominican Republic and more mid-Atlantic routes using the company’s new hub in Baltimore are also on the table.

But Wolf promises that Cape Air will never abandon Provincetown. While the percentage of Cape Air’s revenue from the Boston-Provincetown route has fallen to three to five percent — from the 100 percent it represented when Cape Air began 19 years ago — the route will remain, he said.

“This is a much bigger company now. We have a lot of diversity in our revenue to support the Boston-Provincetown market. That allows us to remain tremendously focused on Provincetown but also provide products and services of a larger company,” he said.

Pru Sowers can be reached at psowers@provincetownbanner.com

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